Thursday, September 28, 2023
HomeEconomySequoia to divest China, India/Southeast Asia businesses amid geopolitical tensions

Sequoia to divest China, India/Southeast Asia businesses amid geopolitical tensions

Dollar /RMB

Add/Remove from Watchlist

Join the watch list

Add Job

Location successfully added to:

Zhu and M. Sriram

HONG KONG (Reuters) – U.S. venture capital giant Sequoia Capital said on Tuesday it plans to split its China and India/Southeast Asia operations Split into two separate companies to better address economic and geopolitical challenges.

spin-off, the two new companies will adopt their own brand, will happen in March , 21, Sequoia Capital in Head of Asia Shailendra Singh said in a statement signed by managing partner Roelof Botha, head of China Neil Shen and India and Southeast Asia.

The firm’s venture capital operations in the U.S. and Europe will remain called Sequoia Capital.

Economic challenges and geopolitical tensions have made financing and investing difficult and eroded returns for global venture funds. “Running a decentralized global investment business has become increasingly complex,” Sequoia said in the statement. “This makes using centralized backend functionality a hindrance rather than an advantage.”

As the world’s second largest economy, global business Chinese investment in particular has slowed – the biggest economic war emerging from COVID – The pandemic was contained, followed by increased regulation, which hindered the growth of the technology and internet industries.

Sequoia China said it would retain its current Chinese name and adopt the English name HongShan, while Sequoia India and Southeast Asia would become Peak XV Partners. Sequoia started investing in local companies in China, India and Southeast Asia more than A few years ago, according to the statement .

Sequoia China, founded and led ex-entrepreneur and investment banker Shen, invested more than 1, From technology to healthcare and more company of. It manages about $ $1 billion in assets and raised $9 billion across four funds . Its signature assets include social media giant ByteDance, food delivery and local service company Meituan, and online fashion retailer PDD Holdings Inc.

A Sequoia spokesman said business considerations were the main reason for the separation.

“Very Rational Choice”

U.S Security concerns and tit-for-tat trade restrictions have kept many dollar investors on the sidelines of China lately. The Biden administration has been working on new rules to limit U.S. investment in China, and Sequoia Capital has hired a national security firm to advise on how to mitigate such risks, sources told Reuters.

“This separation should allow each regional entity to be more flexible and independently pursue investment opportunities, better able to respond to changing geopolitical conditions and local compliance requirements, and resolve portfolio conflicts between entities,” said principal Weiheng Chen. Wilson Sonsini Law Firm is practicing in Greater China.

According to Steven Yu, Shanghai-based partner at Chinese law firm Global Law Firm, many U.S. dollar and renminbi investors are wary of Investing in Sequoia China is worrying. Brands amid US-China tensions.

Yu said the separation would allay the concerns of many yuan investors, which could make Hongshan more attractive to them.

“This is inevitable and a very rational choice.”

China-focused venture capital Reuters reported last week, citing Preqin data, that fundraising in the first half of the year was set to mark its weakest year in at least eight years. ByteDance, of which the Sequoia Sino-US team is a joint investor, has been known for its support since the Trump era Ownership of global social media platform TikTok has been caught in a Sino-U.S. crossfire, and still faces scrutiny in the U.S. Shen will remain on the B-board after the separation.

“As each entity’s portfolio expands to include companies that are emerging as global leaders, we see The market is increasingly confused by conflicts between entities,” Sequoia Capital said in a statement.

Sequoia India is the largest venture capital firm in the country with $9 billion in assets under management. Singh and his team raised a $2.5 billion India and Southeast Asia fund last year, their largest to date.

Some of their biggest investments include food delivery giant Zomato, software company Freshworks and struggling hotelier Oyo.

The business has struggled with a series of portfolio governance issues since Scandals in India since last year.

(1 USD=7.50 56 Chinese Yuan Renminbi)



Please enter your comment!
Please enter your name here


Featured NEWS